The UK unemployment rate has risen to its highest level for two years, official figures show.
The unemployment rate grew to 4.1% in the three months to July, compared with 3.9% previously.
Young people were particularly hard hit, with those aged 16 to 24 suffering the biggest drop in employment compared with other age groups.
Chancellor Rishi Sunak said “helping people get back into, or finding new work” was his “number one priority”.
But in a briefing to the Cabinet on the economy, he reaffirmed a decision not to extend the government’s Job Retention Scheme which ends on 31 October.
Mr Sunak told colleagues that “indefinitely keeping people out of work is not the answer”, but added that he would “be creative” in finding ways of helping people.
New data from the Office for National Statistics showed that firms continued to remove staff from payrolls as they prepare for the end of the scheme.
Some 695,000 UK workers disappeared from the payrolls of British companies since March, when the coronavirus lockdown began.
Meanwhile, there were 156,000 fewer young people in employment in the three months to July compared to the previous quarter.
“Generation Z has been hit particularly hard by the economic fall out of the pandemic as the retail and hospitality sectors, which have taken such a battering, are often relied on to help school and university leavers find an entry-level job, and get started in the world of work,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Sadly, this may not just be a bump in the road but could have long term consequences for the path of their careers.”
The government has launched a scheme called Kickstart to create work placements for unemployed young people. Employers will be paid £1,500 for every 16-24 year old they train.
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